One possibility would be to swap the living room and the dining room. Since the current living room is larger than the current dining room you could still keep some comfortable seating (couch and upholstered chairs?) against the front wall for a keeping room/dining concept. Then your new dining areas (kitchen and dining room) and living areas (living and drawing room) would have good flow between them, which would work well both for family and entertaining. You could also add some builtin bookshelves in the drawing room or new living room to create a library area to add another fun element to the living areas. These bookshelves could be against the long walls in the drawing room, around the window with a window seat in the living room (former dining room), or built to create some separation in the open area between the drawing room and living room/stair area. Your plan seems to show some sort of builtin there, but I'm not sure what it is.

I think a comfortable distance between the island and the counter is around 42". It seems that you have only 30" between your cook top and the counter. I might be a little too tight. The wall between the entrance and the kitchen could be 4' long instead of 6', you would then be able to move the island a foot which would give you more room between the cook top and the island. Could you switch the location of the toilet and vanity in your dad's bathroom so your enter facing a vanity instead of a toilet which is a lot nicer.

On your paint problem I can't be much help. This usually happens because of damp -- please get a damp expert to make sure that there isn't any damp lurking in your walls. I had this once when I had pipes leaking inside the walls. I didn't know that. The other alternative is something like painting before the plaster is dry or some kind of chemical mismatch. I do know you will have to scrape all the mucky powdery stuff away and start again, at least on those areas. Don't try to seal and prime and repaint until you know exactly what the problem is and how to fix it.

OK... but the wire wont be lower as it is fixed now. The wire in the pics below is the wall facing each other. They were leveled on equal height but the beam on one wall makes it seem a little above. But i think you guys are absolutely right that up and down lights wont look good there. I think you are right about down lights lessismoore. Would it look good if i go with two different lights on opposite walls??? it would look odd right.